Prabhudas Lilladher has given Buy recommendation for Oil and Natural Gas Corporation with a target price of Rs. 155 in its research report issued on Jun 25, 2021
Prabhudas Lilladher’s research report on Oil and Natural Gas Corporation
We increase our earnings estimates by 35%/33% to factor rise in crude oil prices of USD65/70/bbl for FY22/23E. Global crude oil prices recently increased sharply as OPEC countries cut production, while demand recovers from recent pandemic. However as OPEC + countries increase their supplies and Iran sanctions get lifted, prices will likely come off. ONGC stock underperformed broader index due to divestment concerns of Government of India share and inefficient capital allocation policies.
However, we are positive about long term prospects given 1) production improvement in new projects, 2) higher crude oil realization with low cost and 3) attractive valuations. Reiterate ‘BUY’ with a TP of Rs155 (Rs114 based on 4.5x FY22E EV/E).